AO to Grant Refund if there is No Reason Forthcoming from him for Delayed Processing of ITR

Facts of the case:

• Petitioner filed a loss return of income on 17/10/2018, wherein, refund of Rs. 20.24 crores (approx.) was sought, being the excess amount paid as tax in view of tax deduction at source done by the Petitioner’s customers.
• Centralized Processing Centre (CPC) issued a notice under section 143(1)(a) of the Income Tax Act, 1961(the Act) on 10/05/2019 seeking explanation as to a proposed adjustment of Rs. 1.33 lakhs claimed under section 36(1)(va) of the Act.

 Contention of the Petitioner:

• The Petitioner responded to the notice of CPC vide submission dated 27.05.2019, claiming that they were entitled to the deduction as claimed in accordance with the provisions of the Act.
• In view of the return of income not being processed, the Petitioner by various letters dated 13.06.2019, 14.06.2019, 10.07.2019, 11.07.2019, 15.07.2019, 17.07.2019 and 08.08.2019 sought an early processing of the return of income under section 143(1) of the Act.
• Petitioner was suffering losses and was facing cash flow difficulty. This problem essentially arose on account of the fact that their application under section 197 of the Act seeking nil deduction of tax in the previous year was not accepted and only partial deduction of tax at source was granted.
• Petitioner approached the High Court and seeks a direction to the Respondents to expeditiously dispose of their return of income by intimation under section 143(1) of the Act and grant refund due along with interest thereon.

 Judgement of High Court of Bombay:

• Petitioner has suffered from undue hardship only because the Respondents (CPC and Assessing Officer) are not discharging their duties under the Act.
• There is no reason forthcoming from the Revenue as to why the delay in processing the refund claim.
• We direct the CPC and Assessing Officer to process the return of income for the AY 2018-19 under section 143(1) of the Act as expeditiously as possible, within a period of three weeks from today.
• Further, consequent to the above, pay to the Petitioner the refund, if any due, within a further period of two weeks from the date the return of income is processed.

 Conclusion:

CPC and Assessing Officer cannot take undue advantage of intimation under section 143(1)(a) to delay the processing of return and grant refund to the Assessee if they do not have valid sustainable reason or grounds.  

Source: [2020] 116 taxmann.com 50 (Bombay), Aegis Customer Support Services (P.) Ltd. v. Income Tax Officer, Ward-6(1)(1)